I. Capital receipts create a liability or cause a reduction in the assets of the Government.

II. Borrowings and disinvestment are capital receipts.

III. Interest received on loans creates a liability of the Government.

Which of the statements given above are correct?

(a) I and II only

(b) II and III only

(c) I and III only

(d) I, II and III

Ans-a

Explanation

Capital Receipts- All those receipts of the government which create liability or reduce financial assets are termed as capital receipts.

Capital Receipts include recovery of loans , Borrowings and other liabilities, Other receipts (mainly PSU disinvestment) 

Hence, statements 1& 2  are correct

Revenue Receipts: Revenue receipts are those receipts that do not lead to a claim on the government.They are divided into tax and non-tax revenues. Non-tax revenue of the central government mainly consists of interest receipts on account of loans by the central government, dividends and profits on investments made by the government, fees and other receipts for services rendered by the government. Cash grants-in-aid from foreign countries and international organisations are also included 

Hence, statement 3 is incorrect

Read: Previous Year UPSC Economy Questions (PYQs) With Explanation 2025